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Italy sold AU$2.9 billion in three-year debt at 3.89 per cent yesterday, higher than the 2.76 per cent it was forced to pay at a similar auction last month.

Demand for the debt issue was also muted.

Italy's benchmark 10-year bond yields have been rising in recent weeks as investor concerns about the solvency of struggling southern European nations have flooded back, although interest rates eased slightly yesterday to 5.4 per cent.

Investor fears have also been exacerbated by mixed signals from the European Central Bank about whether it might intervene in debt markets to keep eurozone borrowing costs down.

The managing director of the International Monetary Fund, Christine Lagarde, yesterday urged the ECB to show "continued support" for the eurozone. In a speech to the Brookings Institution in Washington, she also called on IMF member states to increase the fund's resources when they gather for the annual spring meeting next week.

However, Ms Lagarde downplayed expectations of the final figure that might result.

She said: "The needs now may not be quite as large as we had estimated earlier this year."

Ms Lagarde had previously called for the fund's lending capacity to be increased to $1 trillion, which would have entailed raising about $600 billion in new pledges from members.

Reflecting the general market concern about rising sovereign borrowing levels, the OECD yesterday called on industrialised nations to cut their national debts to 50 per cent of GDP over the coming decades to create a "safety margin" against future crises.

Eurozone states have seen their debt-to-GDP ratios spiral since the 2008 financial crisis.

But to hit this target Japan and the United States would have to enact the deepest cuts. Japan would need fiscal tightening worth more than 12 per cent of GDP a year to reach the 50 per cent mark by 2050.